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Defense ministry launches privatization plan

Defense economics * The ministry aims to provide some NT$10 billion in business to the private sector over the next eight years. * The army has signed contracts with four companies for the repair and maintenance of its helicopters. * A new avionics research institute will be inaugurated tomorrow at the Chung Shan Institute of Science and Technology's Taoyuan branch.

To help stimulate the economy, the Ministry of National Defense yesterday announced plans to release business opportunities worth around NT$10 billion to the private sector over the next eight years.

The announcement was made at a regular ministry press conference, where representatives from the army and the military's Chung Shan Institute of Science and Technology (CSIST) briefed reporters on the plan.

The business opportunities include the privatization of the repair and maintenance for army helicopters and the establishment of the first avionics research institute in the country to push for the development of a local avionics industry.

The repair and maintenance business will cover the TH-67 training helicopter, OH-58D reconnaissance helicopter, UH-1H utility helicopter, AH-1W attack helicopter and the CH-47SD transport helicopter. However, such sensitive equipment as radar and electronic devices will not be included in the scheme.

Major General Li Sheng-wei (李聖偉), chief of the logistics department of the Army General Headquarters, said the privatization of helicopter repair and maintenance will begin in May.

"The TH-67 and OH-58D will be the first to be repaired and maintained by civilian contractors, starting in May. We have completed the selection of four civilian contractors and have signed contracts with them," Li said.

"The UH-1H and AH-1W will be included in the project next year. In 2005, the CH-47SD is to be repaired and maintained by civilian contractors as well," he said.

"Over the next eight years, the project is expected to generate business opportunities worth around NT$5 billion," Li said.

Helicopters are not the only equipment that the army plans to let the private sector repair and maintain. Missile systems as well as artillery and armored vehicles will also be included in the scheme.

The new avionics research institute is to be inaugurated tomorrow at a Taoyuan branch of the CSIST.

The CSIST will use the new institute to introduce technology from Germany's Becker Avionic Systems to promote the local avionics industry.

Becker is providing financing for the new institute and will be the CSIST's partner in running it.

CSIST representative Han Kuo-chang (韓國璋) said the avionics research institute will be significant in that it could not only upgrade the local avionics industry but also generate huge business opportunities.

"With Becker's assistance, we expect to establish a domestic certification mechanism for the avionics products. We have not acquired such capabilities. If we could achieve this, it would mean a lot to us," Han said.

"The avionics research institute is only the first step. Our next step is to establish a company jointly invested by local firms to spearhead the development of the avionics industry," he said.

"Becker has also promised to invest NT$320 million in Taiwan for the establishment of an avionics certification company. Such investment will help give local companies a chance to be involved in large-scale avionics developments in foreign countries," Han said.

"Business opportunities that could be generated as a result could reach NT$5 billion," he said.

"The joint venture with Becker might in some day challenge the world's two leading avionics companies -- Honeywell and Rockwell Collins," he said.
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